Just 10 years ago, Quebec co-ownerships could count on 11 insurers. Since then, there are only 6. Of these, only two or three cover buildings worth between 20 and 50 million dollars.Added to this are insurers that are much more selective than before, due to claims that have increased substantially. All of them have closed ranks and can impose restrictions in their policies, particularly with respect to water damage.
A market that is no longer profitable
This decrease in supply is partly due to mergers and acquisitions, which reduces the choice available to syndicates of co-owners. In addition, several insurance companies have withdrawn from the co-ownership market because it is no longer profitable for them.Claims are on the rise, notably because of a Quebec Construction Code considered “incomplete” by many observers, the absence of mandatory inspections on all residential construction sites, and poorly managed syndicates. In short, many buildings held in divided co-ownership do not have time to age before insurance claims arise.
Rising premiums and deductibles
The result is a sharp increase in premiums and deductibles. They can reach tens or even more than a hundred thousand dollars. According to Yves Joli-Cœur, the lawyer emeritus and Secretary General of the RGCQ, at the rate things are going, this situation could lead to a real crisis in divided co-ownership insurance in Quebec, or even to growing instability in this segment of the residential market.The worst-case scenario for co-ownerships in Quebec is that some syndicates of co-owners will no longer find an insurer to take the risk. The syndicates of co-owners would then find themselves “insurance orphans”.
Obligation to insure all buildings?
All these observations raise several legitimate concerns. For example, what resources would be available to a syndicate if it is difficult or even impossible for it to obtain insurance? And what fate awaits those who can no longer find a policyholder with an insurer, despite their obligation to insure their building under article 1073 of the Civil Code of Quebec? Should this obligation also apply to insurers? asks Yves Joli-Coeur.Given the tightening of Quebec’s co-ownership insurance market, several jurists believe that the government should perhaps create a round table to open the debate in order to come up with viable solutions in the short, medium and long term.